Homeowners and prospective homebuyers leaped back into the U.S. housing market last week after a decline in mortgage interest rates stimulated loan demand.
Refinance activity climbed at the fastest pace since October 2024, rising by 37 percent week over week.
Falling mortgage rates fueled renewed interest in the real estate market at the end of February.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less was 6.73 percent, down 15 basis points from the previous week. This was the lowest level of the year.
“Mortgage rates declined last week on souring consumer sentiment regarding the economy and increasing uncertainty over the impact of new tariffs levied on imported goods into the U.S.,“ Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said in a statement. ”Those factors resulted in the largest weekly decline in the 30-year fixed rate since November 2024.”
Mortgage rates track the benchmark 10-year Treasury yield.
After its meteoric ascent since September 2024, the yield peaked in mid-January and has tumbled by nearly 60 basis points, to about 4.24 percent, which has caught the Trump administration’s attention.
“Interest rates took a beautiful drop, big beautiful drop—it’s about time,” President Donald Trump said in his prime-time address before Congress on March 4.
The sharp drop has been driven by strengthening investor safe-haven demand amid U.S. trade policy uncertainty.
The leading stock averages—the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite Index—have tanked in recent sessions on tariff-fueled concerns.
“What we do know is that the see-saw action out of Washington and uncertainty coming from the White House when it comes to enacting tariffs has been causing intraday volatility and hanging a cloud over this market for weeks,” Jay Woods, the chief global strategist at Freedom Capital Markets, said in a note emailed to The Epoch Times.
Financial markets have been digesting a wave of disappointing economic figures, which have renewed talk about stagflation—anemic growth, rising unemployment, and elevated inflation.
Apollo’s chief economist, Torsten Slok, said in a note emailed to The Epoch Times: “[Policy uncertainty] could create a sudden stop in the economy” as consumers halt spending, companies stop hiring, and households suspend their vacation plans. These developments could then prompt the Federal Reserve to start cutting interest rates, which would accelerate the decline in Treasury yields.
“That is why a trade war, by definition, is a stagflation shock: higher prices and lower sales. If tariffs on Canada and Mexico continue for several months, then the Fed will focus on the rising unemployment rate and start cutting rates soon.”
US Housing Market
Recent data, meanwhile, suggest mixed conditions in the U.S. housing market.Lawrence Yun, the NAR’s chief economist, attributed the numbers to frigid temperatures, high mortgage rates, and elevated home prices.
“It’s evident that elevated home prices and higher mortgage rates strained affordability,” Yun said in a statement. “Even a slight reduction in mortgage rates will likely ignite buyer interest, given rising incomes, increased jobs and more inventory choices.”
In the home stretch of 2024, single-family construction was solid, helping alleviate constrained existing home inventories. As 2025 progresses, there could be “upside and downside risks,” according to Robert Dietz, chief economist at the National Association of Home Builders.
Lumber, which accounts for approximately 2 percent of the cost of a new home, has entered the discussion surrounding the new administration’s broader economic agenda.
